Penney's says no store closings, staff cuts planned

J.C. Penney Co. says has no plans to close stores or reduce headcount due to company performance.

The retailer made the statement after saying Monday that it had drawn $850 million out of a $1.85 billion revolving credit facility to help buy inventory as it plots its course after a failed turnaround.

The department store operator will use the proceeds to fund working capital needs and capital expenditures, including buying inventory as it revamps its home goods section, an effort it should complete next month.

"As we near completion of the home department transformation in over 500 stores, we have been undertaking and will continue to experience a significant inventory build and increase in capital expenditures," said Chief Financial Officer Ken Hannah.

The borrowing is subject to an interest rate of 5.25 percent and matures in April 2014.

Hannah said the draw provided more current funding than needed to ensure liquidity and that J.C. Penney would continue to explore additional capital-raising options with its financial advisers.

The company is working with the advisory arm of Blackstone Group LP, sources told Reuters last week.

Hannah said on Feb 27 that the company increased its line of credit to $1.85 billion from $1.5 billion, increased the number of lenders, and increased the accordion feature to $400 million from $250 million.

Coupled with cash on hand, the amendments gave J.C. Penney access to short-term capital of about $3 billion, Hannah said at the time.

In March, Hannah said he was not opposed to using the revolver for J.C. Penney's working capital needs.

J.C. Penney brought in Apple Inc. executive Ron Johnson as chief executive officer in late 2011. Its sales slid in 2012 as his dramatic changes alienated core customers without bringing in new ones.

Last week, Johnson was replaced with his predecessor, Myron Ullman.

Shares of J.C. Penney were down nearly 1 percent at $14.49 on the New York Stock Exchange.